Correlation Between Schneider Electric and PLAYTIKA HOLDING

Can any of the company-specific risk be diversified away by investing in both Schneider Electric and PLAYTIKA HOLDING at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Schneider Electric and PLAYTIKA HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schneider Electric SE and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on Schneider Electric and PLAYTIKA HOLDING and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Schneider Electric with a short position of PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and PLAYTIKA HOLDING.

Diversification Opportunities for Schneider Electric and PLAYTIKA HOLDING

0.54

Correlation Coefficient

Schneider Electric  PLAYTIKA HOLDING

Very weak diversification

The 3 months correlation between Schneider and PLAYTIKA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING and Schneider Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Schneider Electric SE are associated (or correlated) with PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of Schneider Electric i.e., Schneider Electric and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between Schneider Electric and PLAYTIKA HOLDING

Assuming the 90 days horizon Schneider Electric is expected to generate 2.49 times less return on investment than PLAYTIKA HOLDING. But when comparing it to its historical volatility, Schneider Electric SE is 1.48 times less risky than PLAYTIKA HOLDING. It trades about 0.08 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  656.00  in PLAYTIKA HOLDING DL 01 on September 4, 2024 and sell it today you would earn a total of  124.00  from holding PLAYTIKA HOLDING DL 01 or generate 18.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Schneider Electric SE  vs.  PLAYTIKA HOLDING DL 01

Schneider Electric

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Schneider Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PLAYTIKA HOLDING

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLAYTIKA HOLDING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schneider Electric and PLAYTIKA HOLDING

The main advantage of trading using opposite Schneider Electric and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric position performs unexpectedly, PLAYTIKA HOLDING can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PLAYTIKA HOLDING will offset losses from the drop in PLAYTIKA HOLDING's long position.

The idea behind Schneider Electric SE and PLAYTIKA HOLDING DL 01 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.